Wednesday, February 23, 2011

Michigan governor's proposed budget: not all bad news for people with disabilities

On February 17, 2011, Michigan's Governor Rick Snyder laid out his budget proposal for fiscal year 2012. FY 2012 begins October 1, 2011.

There is some good news in the proposal for people with developmental disabilities. This is from an report on the highlights of the governor's budget:

  • Medicaid eligibility is maintained and provider reimbursement rates are supported without reductions to preserve health care and access for those most vulnerable. 
  • A Medicaid budget that is funded at $11.2 billion, reflecting the institution of a new 1 percent health care insurance assessment on all paid health care and dental insurance claims. 
  • The preservation of over $1.4 billion in funding for programs that assist nearly 55,000 special education students, as well as $1.2 billion for core education programs such as services for academically at-risk students and adult education.

Schools and Universities, however, will be taking a big hit in the proposed plan. K-12 funding will be reduced by 5 % or $500 million. The state will encourage schools to adopt  "best practices" that generate savings on medical benefits for employees and reduce spending on "non-instructional" services. It remains to be seen whether there are additional savings to be squeezed out of already stressed school district budgets.

Another problem is the "elimination of statutory revenue sharing payments for cities, villages and townships in fiscal year 2012 to be replaced with a new incentive-based revenue sharing program available to cities, villages and townships that meet state standards and adopt best practices."  This amounts to a reduction of nearly one-third of revenue sharing funding available to local governments. Local governments will have less to spend on safety, fire protection, and other local services and the mental health system will have more difficulty serving people who are not eligible for Medicaid. They will not be able to shore up the mental health system to provide services that are needed but not necessarily mandated or covered by Medicaid. This exacerbates the problem of declining revenues from property taxes for local governments. A more detailed analysis of the impact on Washtenaw County is covered in an article from

There will also be less money available for poor people with the elimination of Michigan's contribution to the Earned Income Tax Credit (EITC). Snyder says that the money saved will go into maintaining Medicaid and other services for the poor, but Stephen Henderson, a columnist for the Detroit Free Press has a good point: while the budget calls for eliminating tax breaks for wealthier people, "poor people will take a bigger hit, relatively speaking than everyone else". This will also effect small businesses, especially in Detroit where the EITC reduction will take $330 million out of the local economy.

In an interview with the Detroit Free Press, the Governor explains the thinking behind the balancing act that his administration did to justify the changes he is proposing. Last Sunday's Detroit Free Press editorial page, not known for its support of Republican budget initiatives, is surprisingly mild in its criticism of the governor's proposals. Michigan's budget problems have been long in the making and there is a tendency to hope, perhaps beyond reason, that these proposals will help.

The Governor's non-ideological approach to Michigan's problems and his eclectic method of problem-solving are mulled over by Free Press columnist Brian Dickerson in his assessment of the governor as "A mild-mannered radical". Dickerson foresees the possibility of attacks from both ends of the political spectrum, but says that "Snyder's ace in the hole is the voters' widely shared conviction that Michigan's fiscal disease cries out for nothing less than radical surgery."

So far, the governor appears to have avoided a full-frontal Wisconsin-style assault on public employee unions, but one can expect that local adjustments will inevitably lead to losses in wages and benefits for public agency employees, if the governor's budget is adopted.

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